Qantas to pay $105m after class action over cancelled COVID flights

Qantas’ decision to initially refuse refunds for cancelled COVID-era flights and provide expiring credits instead has cost the airline more than $105 million after it agreed to settle a class action for that amount, addressing a sore point from former chief executive Alan Joyce’s tenure.

Hundreds of thousands of passengers could receive compensation from the provisional class action settlement announced on Friday, which covers people whose flights were scheduled to depart between January 1, 2020 and November 1, 2022.

Ticket holders alleged the airline breached its contractual obligations to offer customers refunds when COVID hit, providing them with flight credits instead that had expiry dates and were hard to redeem because the pandemic continued to disrupt air travel.

Qantas’ treatment of customers sparked outrage toward the airline at the time and Qantas extended the timeline for expiration on the credits three times and then ultimately offered refunds with no expiration date.

Under the terms of the settlement, which are subject to the approval of the Federal Court, Qantas will make no admission of liability.

The $105 million settlement should recover the benefit Qantas obtained by failing to offer refunds immediately said Andrew Paull, partner at Echo Law, which brought the suit.

“The amounts that individuals get will depend on how many people come forward,” Paull said.

The law firm will propose a formula to the court that considers the amount people paid for their flight, when it was cancelled, how long it took them to get a refund, he said.

Joyce stepped down as CEO in September 2023, after the storm of outrage engulfed the airline.

Eligible customers, expected to be in the hundreds of thousands, will be identified and contacted based on Qantas records, Echo Law said, and informed via a court-approved process.

The settlement amount is nearly double the $55 million provision for the case made by Qantas in its second half of fiscal year 2026 results.

The settlement sum is in addition to Qantas’ public commitment, provided in August 2023, to provide refunds to all COVID credit holders.

The credits for tickets cancelled during COVID-19 were initially set to expire one year after the ticket was initially purchased but lockdowns and border closures persisted.

When international flights restarted in 2021, fares were much higher than before the pandemic, eroding the value of the vouchers.

At the same time, the reliability of flight departures and arrivals cratered, with cancellations rippling across the sector for Qantas, Jetstar and Virgin.

Following mounting public fury and regulatory backlash in August 2023, Qantas removed expiry dates on $570 million worth of COVID travel credits owed to customers, on tickets issued up until September 30, 2021.

Friday’s settlement follows a separate case, in May 2024, when Qantas admitted to the Australian Consumer and Competition Commission it had advertised and sold tickets on already cancelled flights to tens of thousands of consumers.

The so-called “ghost flights” resulted in Qantas paying $120 million in penalties and compensation.

Joyce appeared in a fiery Senate inquiry in August 2023 in which he defended the airline from claims its marketing decisions had made the COVID cost-of-living crisis worse for customers.

Combined with accusations over the ghost flights and the firing of 1800 ground crew, later to be found illegal, the firestorm consumed the leadership of Joyce, and he stepped down early the next month, with then-CFO Vanessa Hudson starting as CEO early.

Shadow infrastructure minister Senator Bridget McKenzie said: “Qantas sought to take advantage of its customers during a time of distress and uncertainty during COVID, and that corporate behaviour was unconscionable.”

“It was an act of arrogance and an insult to the Australian travelling public by the then management of a much-loved airline which had forgotten that it was a customer-based business.”

Following the events of 2023, Qantas did a wide-ranging governance review and has taken a number of steps to prevent this outcome happening again, the airline said.

The settlement will be paid to a court-approved administrator, currently expected in the second half of the year. The case was conducted by law firm Piper Alderman as agent solicitors for Echo Law and supported by litigation funders CASL and Omni Bridgeway.

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